"I'm pretty sure she'd be hanging out backstage, but we'd all love to see her out there rocking out with Coldplay."

Other fans at Splendour in the Grass said the muddy conditions at Byron Bay's Belongil Fields might not match the usual comforts enjoyed by the A-list star. "I'd certainly like to know what Gwyneth thinks of the mud and weather," said Louisa McCole, 27, from Cremorne Point in Sydney.

But even aside from Hollywood royalty, the festival attracted thousands of music fans from Sydney, Melbourne and Brisbane.

More than 2500 fans were camping in tents next to the festival site waiting to watch bands including Powderfinger, the Superjesus and the John Butler Trio.

Silverchair band member Chris Joannou was on hand to watch his girlfriend, Sarah McCleod, perform with the Superjesus.

Despite the basic conditions at the festival, VIPs were treated to free drinks and food backstage inside a velvet-lined tent.

Fans were treated to performances on four different stages including a massive big-top tent.

"It's great to see so many people come here from all different cities and towns," said Dave Marschke, 36, from Brisbane.

"We all get to mix in together and enjoy some brilliant music."

The popularity of the festival has cemented Byron Bay's reputation a a music centre.

This, the festival's third year, has been the biggest yet, with tickets selling out in record time.

"I think the level of anticipation this year is beyond expectations," said festival organiser Jessica Ducrou, who established Splendour In The Grass with music manager Paul Piticco.

"This is an event for discerning music lovers," said Ducrou.

"They all come to Byron because they can listen to great music and feel like they're having a holiday at the same time."

The festival is also an excellent marketing opportunity for young bands, who are keen to associate themselves with one of the hottest events on the festival circuit.

But even Australia's biggest bands have expressed their passion for the Byron Bay event.

"We just love Splendour In The Grass, we played at the first one and it's a favourite event of ours," said Bernard Fanning, lead singer of Powderfinger.

Apart from scattered stages and the usual market stalls, the festival site boasted its own CD stall, a specialty cigarette shop and a signing tent where hundreds of fans queued to get autographs.

Some stores in the area were sold out of wet-weather items including raincoats.

"Most of the musos came in here yesterday and bought up all the wet-weather gear and gumboots," said a spokesman for Kmart in Ballina.

But by late yesterday afternoon the weather had cleared.

Paltrow and Martin were expected to stay in Byron Bay's exclusive Wategos Beach area, which has already proved a favourite for visiting musicians including Keith Richards and Avril Lavigne.